Can Procter & Gamble Outgrow Kimberly-Clark and Unilever?

Procter & Gamble (NYSE: PG) will release its quarterly report on Friday, and even though investors have bid the stock to all-time record highs in recent months, P&G isn't expected to produce year-over-year earnings growth in its current report. But in the long run, company earnings growth could accelerate from its past challenges and help respond to the threat that Kimberly-Clark (NYSE: KMB) and Unilever (NYSE: UL) have posed to P&G's industry leadership recently.

Procter & Gamble has one of the most impressive consumer-products lineups in the world, with two dozen different products boasting billion-dollar sales on an annual basis. Yet former CEO Robert McDonald took a lot of heat from analysts and activist investors for failing to deliver continued growth in key areas, especially the emerging markets. With A.G. Lafley signing back on as CEO, the stock has once again risen in popularity, but will P&G deliver on its promise? Let's take an early look at what's been happening with Procter & Gamble over the past quarter and what we're likely to see in its report.

Stats on Procter & Gamble

Analyst EPS Estimate

$1.05

Change From Year-Ago EPS

(0.9%)

Revenue Estimate

$21.05 billion

Change From Year-Ago Revenue

1.5%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can Procter & Gamble earnings start growing again?Analysts have become more pessimistic about Procter & Gamble earnings in recent months, cutting estimates for the quarter ended in September by $0.07 per share and also pulling back modestly on full-year fiscal 2014 and 2015 projections. The stock has largely treaded water over the past quarter, falling by less than 1% since late July.

Procter & Gamble's previous earnings report was reasonably well received, setting the stage for a solid quarter. Overall revenue rose 1%, but earnings climbed 5% despite P&G suffering from rising expenses that lessened the effect of cost-cutting measures. Unilever saw similar sales volume gains of 3%, and P&G seemed to do well in the U.S. even as Unilever claimed that the North American region didn't provide it with strong results.

One area of concern for P&G has been in emerging markets, where growth has slowed considerably. P&G has projected lower growth of about 6% for its key developing markets, while Unilever has warned that investors shouldn't expect its recent double-digit sales gains in emerging markets to continue. To respond to the conditions, P&G expects to add high-value innovations to existing product lines in order to reap more from sales and keep costs under control.

Procter & Gamble is also doing its best to reclaim its past reputation as an innovator. Last month, P&G increased the absorbency of its Pampers diapers, allowing the company to reduce the number of diapers per box while keeping prices steady. By contrast, Kimberly-Clark doesn't have any plans to make similar moves with its Huggies line of diapers, potentially giving P&G a competitive advantage if the initiative leads to lower costs. Similar success last year with its Tide Pods high-end laundry product also helped P&G restore confidence in its ability to market smart products to consumers.

In the Procter & Gamble earnings report, watch to see how the company does in comparison to Kimberly-Clark, which beat expectations in its quarterly report yesterday morning. P&G still has the wherewithal to hold back Kimberly-Clark and top Unilever's global reach to retain its position atop the consumer goods industry.

Can P&G keep dominating the world?Procter & Gamble depends on global markets for its success, but it's not the only company rewarding investors with worldwide profits. The Motley Fool's free report "3 American Companies Set to Dominate the World" gives you some other names that have done especially well abroad. Click here to get your free copy before it's gone.

Click here to add Procter & Gamble to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

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